Posted: Friday 11th September 2020 in Retail Strategy, Thought Leadership.

We all love getting a delivery in the post. It’s like getting a special gift, from me-to-me, delivered to your doorstep without having to leave. It’s convenient, and in some cases, absolutely essential. When the pandemic hit, the usual bricks and mortar stores saw a shift to their online stores, as more and more people shopped online, and maybe even discovered shopping online with some brands for the first time. But just because it was essential to buy online, doesn’t mean that we were always buying the essentials. According to Yahoo Finance, research from Barclaycard showed that the average UK consumer spent £771 to “lift their spirits” in lockdown. This equated to over £40 billion on non-essentials, including items such as books, video games and subscriptions.  

The growth of subscriptions 

As reported by the Growth Channel, from 2013 – 2018, the subscription e-commerce market grew 100% year-on-year. Add on the restrictions of a global pandemic, and we can only imagine how much that has grown again. “The takeaway is that consumers are changing the way they buy products, and it presents a huge opportunity. While reports from eMarketer have e-commerce outperforming 2020 projections by 18% (likely due to the increase in demand due to COVID-19), this industry momentum will not crown everyone as winners. Instead, companies that invest in ways to get loyal and repeat customers, will thrive long after the pandemic passes, while the others will fall behind.” 

Loyalty is becoming more important than ever. During the pandemic, it was shown by a HappyOrNot survey that 45% of companies have seen an online demand increase, meaning that if companies were doing it right, they could potentially have a growth in new, loyal customers. 

Who are the winners? 

According to Finder, Brits spend more than £2 billion every year on subscriptions services, including apps, brand services (like Amazon Prime) and subscription boxes. 

When it comes to subscription boxes that come delivered to your door, the most popular is estimated to be anything related to food. A whopping 37% of subscribers subscribe to some kind of food service, whether be it a snack box or meal-prep. When thinking about the modern world of food, there are so many reasons why you might want to try a food subscription box. It could be for ease, with boxes like HelloFresh providing the exact ingredients you need to make dinner quickly. It could be for price, like Graze who provide various healthy snacks for a relatively reasonable price (likely much cheaper than what you could get in your local Waitrose). Or, for variety, like TheVeganKind who provide lifestyle boxes filled with all vegan treats that you might not be able to find in your regular supermarkets. 

After food, razors and shaving items are the next most popular subscription box range. This is likely due to the price of high-street razors and the hugely saturated market. If you’re a regular shaver, it can be frustrating having to pick up a new razor head or shaving foam in the weekly food shop. This is pricey, but also not the most environmentally friendly option. Grooming companies such as Gruum offer subscription boxes, where you can pick the type of razor head you need or even add vegan shaving foam and gel to your monthly box. 

The grooming industry is quickly followed by the beauty industry when it comes to subscription box popularity, where there are plenty of brands to choose from who provide subscription services, such as LookFantasticBirchBox and Cohorted

Why do people subscribe to boxes? 

As briefly discussed above, there could be various reasons why subscribers love to receive a monthly or bi-weekly box in the post. Whether it is for ease, price or variety, there will be a subscription service for you. 

In line with this, Finder also discovered that 45% of subscribers liked to subscribe to boxes to save money, with many subscription boxes offering high-value products for a lower price than you would find if bought separately. 

Subscribers also subscribe simply for a treat for themselves. 43% of box subscribers enjoy the feeling of getting a box of treats in the post that has already been pre-paid. For this reason, people are likely to buy from retailers that they trust highly and usually shop with often, as they trust in the products they will be receiving. 

Making consumers loyal again with tech 

In what is being called a “high-street first”, global coffee chain Pret a Manger have created their very own monthly digital drinks subscription aptly named “YourPret Barista”. Subscribers will pay £20 per month to get up to 5-barista prepared drinks every day. Don’t like coffee? Don’t worry, because Pret have included smoothies, frappes, hot chocolates and teas, and they won’t charge you for a dairy-free milk alternative either. But why have Pret made this decision, at this time? 

The answer is, likely, several factors. It hasn’t exactly been a secret that Pret struggled when the government announced their working from home guidelines. Anyone who could do their job from home, did, meaning that anyone who would normally be buying their essential morning coffee from Pret, didn’t. The mainstream news hasn’t been shy to let us know that the cities are finding it hard to cope without the usual hustle and bustle, but Pret could have introduced discounts and offers to entice customers to return. So, why a subscription model? 

Pana Christou, the Pret CEO, states in an Essential Retail article, “This is just the first step in our plan to bring Pret to more people. We now have the building blocks to establish Pret as a multichannel, digitally-led business, and YourPret Barista is the first big launch we’re able to deliver through our new technology platform.” 

The future of e-commerce 

We have seen so much change to online retail over the last decade, but there was never that true need to transform your online retail model. The global pandemic has forced many of us to shop online, use various payment solutions and even treat ourselves differently to how we did before. Maybe every month you would treat yourself to a meal out at a nice restaurant, spend money on premier seats at the cinema or even go to another city for a weekend break – as none of this has been possible, especially in the same way as pre-Covid times, people are now treating themselves in different ways. 

So, could the future lie in a subscription model related to your business? And could it turn customers into loyal brand advocates? It seems that if you use insights to completely understand your audience, this could well be worth looking into. 

Understanding your customer has never been more essential  

During a webinar held by Peak, there was a huge emphasis on using data to understand your customer and make retail decisions during peak trading periods, and this is especially important now we are going through a global pandemic. Many companies have been forced into a quick digital transformation, and the ones who may not survive are potentially the ones who were reluctant to reform to the modern data economy.  

Using data to understand your customer is the best way to get success from your products. If you were to conduct a survey asking your loyal customers if they would subscribe to your services or products, would they? 

To find out more about understanding your customer and embarking on a digital transformation, contact [email protected]